Basics
Pip
The smallest price movement in forex, typically the 4th decimal place.
Full Definition
A pip (percentage in point) is the smallest standardized price movement that a currency exchange rate can make. For most major currency pairs, a pip is 0.0001 (1/100th of 1%), or the fourth decimal place. For JPY pairs, a pip is 0.01 (the second decimal place). Understanding pips is fundamental to calculating profit, loss, and position sizing in forex trading.
Example
If EUR/USD moves from 1.1050 to 1.1051, that's a 1 pip movement. If you're trading 1 standard lot (100,000 units), this 1 pip move equals approximately $10 profit or loss.
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